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International Corporate Alliances and Financial Structure: A Comparative Study on the Turkish Manufacturing Industry

Mine Ugurlu (Associate professor of finance at Bogazici University, Turkey. This research was in part drawn from the author's larger study examining a number of issues affecting financial policies of manufacturing firms which was supported by Bogazici University Research Fund.)

Cross Cultural Management: An International Journal

ISSN: 1352-7606

Article publication date: 1 April 1997

Abstract

This article rests on a comparative study between Turkish firms that form international corporate alliances and domestic firms in the same industry. The findings indicate that firms with foreign partners are not significantly different from domestic firms with respect to the degree of competition and turbulence in the environment, type of technology used, diversification policy, risk taking propensity and goals of top management. Resting on this finding, which allows for the control of several variables affecting the financing decision, the impact of international diversification on capital structure is investigated. The results indicate that firms which join in foreign alliances are similar to domestic firms with respect to capital structure. The research reveals that firms with foreign partners have lower performance and are younger than domestic firms. This finding is supported with the evidence for the negative relation between performance and tendency to perceive international diversification as a new source of finance. Consequently, foreign alliances seem to constitute a means for capital provision and rapid growth for the recently established and low performing firms which have limited access to external sources of financing.

Citation

Ugurlu, M. (1997), "International Corporate Alliances and Financial Structure: A Comparative Study on the Turkish Manufacturing Industry", Cross Cultural Management: An International Journal, Vol. 4 No. 4, pp. 29-40. https://doi.org/10.1108/eb008428

Publisher

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MCB UP Ltd

Copyright © 1997, MCB UP Limited